Asian Markets Back with losses

24 Feb 2009 | 17:01 Asian Markets Back with losses
Stock market in Asian region gave up yesterday's gains after a plunge in the U.S.spooked investors. Most of the regional markets slumped on worries about the deepeningglobal recession hurting company earnings and forcing them to sell shares.

On Wall Street, stocks ended substantially lower, as Dow set at its record low in twelveyears. Though market opened in the green, indices slipped in the red soon. Concerns aboutthe health of GE worried investors today, as is the issue of the nationalization of thebanks here, mainly Citigroup. The Dow Jones Industrial Average ended lower by 250 pointsat 7,114, the Nasdaq closed lower by 53 points at 1,387 and the S&P 500 closed lowerby 27 points at 743. All ten sectors ended in the red today.

In the commodity market, crude oil fell for a third day on speculation that U.S.stockpiles increased for the 19th week in 22 as the global recession saps fuel demand.Crude oil for April delivery fell as much as 36 cents, or 0.94%, to $38.08 a barrel inelectronic trading on the New York Mercantile Exchange at 9:24 a.m. London time. Thecontract dropped $1.59 yesterday to settle at $38.44 a barrel.

Brent crude oil for April settlement fell as much as 17 cents, or 0.41%, to $40.82 abarrel on London's ICE Futures Europe exchange at 9:24 a.m. London time. The contractyesterday declined 90 cents, or 2.1%, to end the session at $40.99 a barrel.

Gold slipped on Tuesday to around $US985 an ounce, continuing a correction after touchingan 11-month high above $US1000 last week. Spot gold was trading at $US989.30 an ounce inAsian trade, down 0.57% from New York's notional close on Monday. Gold hit $US1005.40 anounce on Friday, just 2.5% below the record $US1030.80 reached last March.

In the currency market, the Japanese yen continued to trade week. It was quoted at 95.134against the US dollar.

The Hong Kong dollar was trading at HK$ 7.7530 against the dollar. Actually The Hong Kongdollar is pegged at HK$ 7.8 to the U.S. dollar but can trade between HK$ 7.75 and HK$7.85to the U.S. dollar.

In Sydney trades, the Australian dollar turned weaker, as more heavy losses on Wall Streetand expectations of another local interest rate cut weighed on the domestic currency. TheAustralian dollar closed trading at $US0.6456, down from Monday's close of US$0.6492.

In Wellington trades, the New Zealand dollar ended the day at US50.75c from US51.05c ofMonday and US50.93c on Friday.

The South Korean currency plunged to a near 11-year low against the U.S. dollar Tuesday asrenewed concerns over a credit squeeze prompted foreigners to dump local shares. The localcurrency closed at 1,516.3 won to the greenback, down 27.3 won, or 1.8%, from the previoussession's close and the lowest level since 13 March 1998. The Korean currency dipped aslow as 1,517 won at one point with its value falling 16.9% against the dollar so far thisyear.

The U.S. dollar was higher against the New Taiwan dollar in early trading in TaipeiTuesday. The greenback closed the trade at NT$34.797, up NT$0.169 from Monday'sNT$34.628.

Coming back in equities, in Japan, equity market declined for the third time in a rowfollowing the regional trend which ultimately were trailing behind the Wall Street thatplunged to its lowest level since October 1997 due to the continuing uncertainty about theUS economy's ability to climb out of what's is now a very deep recession. Japanese Nikkei225 Stock Average index dipped down 107.60 points, or 1.46%, to 7,268.56, while thebroader Topix lost 5 points, or 0.68%, to 730.28.

On the economic front, Japanese corporate service prices fell in January to their lowestlevels since March of 1988. The Bank of Japan reported that the Corporate Services PriceIndex was down 0.9% from the month before. The index, which measures prices businesses payfor services such as advertising, and transportation, declined for the fourth consecutivemonth. The Index was down 2.2% compared to January of last year.

In other release, the minutes of the monetary policy meeting held in January were releasedshowing the members expecting the Japanese economy to start recovering, at the earliest,from the latter half of fiscal 2009. According to Bank of Japan, for the Japanese economyto start recovering, it was necessary that global financial markets regain stability andoverseas economies move out of their deceleration phase.

Some members said that Japan was experiencing a sharp economic deterioration equivalent toor even worse than that in the United States and Europe, and this was because, over thepast several years, Japan's economy had established a growth mechanism that depended oncontinued expansion in global demand particularly for durable consumer goods, such asautomobiles, and for capital goods.

In Mainland China, share prices tumbled 4.56%, as fears for economic downturn loomed andthe confidence damped by Wall Street overnight fall to its worst finish since 1997. Thebenchmark Shanghai Composite Index, which covers both A and B shares, fell 4.56%, or105.12 points, to 2200.65. The Shenzhen Component Index on the smaller Shenzhen bourse wasdown 3.72%, or 324.68 points to 8403.02.

In Hong Kong, stock market gave up yesterday's gains closing the day sharply lower,as fresh fears about the financial system that engulfed investor's confidence levels.After opening the day on lower note, the Hang Seng Index continued to slump southward asit ended sharply lower 376.58 points, or 2.86%, to 12,798.52, while the Hang Seng ChinaEnterprise Index, which tracks H shares of Chinese companies, tumbled by 238.80 points, or3.27% to 7,068.21.

In Australia, the stock market closed lower for the second straight session pushed lowerby investors' continuing fears for the economic outlook. The benchmark S&P/ASX200ended the day down 19.60 points, or 0.60%, to 3,331.60, while the broader All Ordinariesdecreased 19.10 points, or 0.60%, to 3,285.

On the economic front, the Rudd Government has announced that it will inject $300 millioninto employment services to help workers who lose their job. They'll now be able to skipthe three-month waiting period for services including career advice, education andtraining.

Deputy Prime Minister Julia Gillard says an extra 10,000 training places will also be madeavailable to help the unemployed re-train for the future.

Prime Minister Kevin Rudd said that in the wake of the impact of the global economiccrisis on jobs it was important to support workers who, through no fault of their own,lose their jobs. The funds will go to employment services providers to deal with theexpected heavier workload as the economic downturn intensifies

In New Zealand, stock market tumbled for the seventh session in a row, trading at a newfive-year low. During the early hours, the benchmark NZX 50 index fell below 2500 for thefirst time since 19 January 2004. The benchmark NZX50 plummeted 2% or 50.758 points toclose at 2487.528. The NZX 15 fell 1.93% or 91.217 points to 4631.871.

In South Korea, stock market slipped on the road of recovery as the market slumped by morethan 3% on Tuesday, 24 February 2009, as a regional sell-off actuated by rising concernsover the global financial system's health that pounded financial stocks and blue chipsacross the board. A drop in the won's value against the dollar, a sign of growing riskaversion among investors, encouraged foreign investors to dump shares. The Korea CompositeStock Price Index tumbled 35.67 points or 3.24% closing the day at 1,063.88 – anotherlowest finish since 23 January 2009 when market closed at 1,093.40 points.

On the economic front, South Korea's consumer confidence index rose to 85 in February from84 in the previous month, reflecting an increase in consumer's expectations that thegovernment measures would stimulate the economy. According to a report by the CentralBank, in February, consumers' sentiment on current living standards rose to 75 from 72,while expectations regarding living conditions in the next six months remained unchangedat 80.

In other economic news, the minutes of the monetary policy meeting reveled yesterdayshowed that all of the South Korean central bank's board members wanted to cut the baserate by 0.5% at their January meeting to shore up domestic demand.

All members of the Bank of Korea's monetary policy committee expressed concerns about asteeper downturn in Asia's fourth-largest economy than had been expected at their Jan. 9policy meeting, the minutes showed. One member said Asia's fourth-largest economy lookedalmost certain to slip into a recession by shrinking for two consecutive quarters and thatjob losses and corporate failures could rise quickly in the coming months.

The real economy is expected to face a serious recession and it can't be ruled out thatfinancial markets could grow more unstable due to an expected rise in corporate debtdefaults,' said the member, who the minutes did not name. The committee lowered the baserate to 2.5% at that time. The meeting was held before the central bank released itsofficial estimates showing that South Korea's gross domestic product shrank by aseasonally adjusted 5.6% in the fourth quarter of 2008 from the previous quarter. Thecommittee cut the rate by another 50 basis points to a record low of 2.0% at the nextmeeting on 12 February 2009, but minutes on the latest meeting will be released in lateMarch.

In Philippines, equities eased by more than a percent as falling local inflationaryexpectations along with the prospects of the country's central bank reducing theinterest rates soon were countered by negative global price action. The main PhilippineStock Exchange index slid 21.45 points or 1.13% to 1,869.59. The broader all shares dipped7.49 points or 0.612% to 1,216.28.

In Taiwan, stock market finished the session closed at two-weeks lower, as a Wall Streetsell-off and gloomy PC market views by Morgan Stanley pressured technology related stocks.The main Taiex share index ended lower by 47.60 points or 1.06% at 4,430.18.

On the economic front, the markets have very little economic reports to digest in today'strading.

In India, the key benchmark indices jumped to trade in green for a brief period andprovisionally settled with small losses after the Indian government on cut excise dutiesfurther and lowered service tax rates in a move to protect the economy from the impact ofthe global economic crisis.

As per the provisional figures, the BSE 30-share Sensex was down 21.15 points, or 0.24%,to 8,822.06. At the day's high of 8,856.52 Sensex gained 13.31 points in late trade. Atthe day's low of 8,619.22, the Sensex lost 223.99 points in early trade and was the lowestlevel for the Sensex since 3 December 2008. The S&P CNX Nifty was down 2.55 points, or0.09%, to 2,733.90.

Elsewhere, Malaysia's Kula Lumpur Composite index was up 0.70% or 6.24 points to 894.07,while Indonesia's Jakarta composite decreased by 16.57 points or 1.26% to 1,295.87.In Thailand, the Thai Stock exchange declined 3.67 points or 0.84% to 431.32.

In other regional markets, European shares fell in early trading on Tuesday, withsentiment knocked after major U.S. indexes ended at 11-year lows, with insurers and oilproducers among the worst performers. Regionally, the U.K. FTSE 100 index fell 0.3% to3,841.27, the German DAX 30 index lost 0.6% to 3,913.48 and the French CAC-40 indexdeclined 1.5% to 2,709.47.